UK Cracks Down on Crypto-Native Businesses: New Rules Require CDD Checks for All Consumers
The United Kingdom has introduced new rules to strengthen its anti-money laundering and counter-terrorism financing regulations, requiring crypto-native businesses to conduct customer due diligence (CDD) checks on all consumers.
New Guidelines for Virtual Asset Service Providers (VASPs)
Under the new guidelines, VASPs must:
- Conduct CDD checks on all consumers
- Maintain detailed records of beneficiaries
- Complete enhanced due diligence on politically exposed persons (PEPs)
- Appoint an individual responsible for overseeing compliance with regulatory issues in the wider financial space
These rules will take effect from January 10, 2020, as part of the Fifth Money Laundering Directive (5AMLD), which is the first European Union anti-money laundering directive to cover cryptocurrencies and bitcoins.
Taxation of Cryptocurrencies
The UK’s Her Majesty’s Revenue & Customs (HMRC) has outlined different tax rates for individuals and businesses involved in cryptocurrency activities:
- Individuals: liable for capital gains tax on their cryptocurrency profits
- Businesses: must pay corporation tax, income tax, national insurance contributions, stamp duty, and value-added tax
Regulation of Crypto Exchanges and ATMs
To operate in the UK, crypto exchanges must:
- Register with the Financial Conduct Authority (FCA)
- Apply for an e-money license
Bitcoin ATMs are also legal in the country, provided they are licensed and regulated by the FCA. The UK currently has over 250 bitcoin ATMs across the country.
Global Regulatory Landscape
The regulatory landscape for cryptocurrencies varies widely around the world. While some jurisdictions have banned cryptocurrency-related activities, many countries remain uncertain about their stance on crypto mining and other activities.
For more information on cryptocurrency regulation or to schedule a consultation, contact Freeman Law at (214) 984-3410 or visit our website at www.freemanlaw.com.